Pro Medicus (ASX:PME) share price surges 8% on historic results

Why did investors react so positively to the Pro Medicus financial results?

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Key points

  • The Pro Medicus share price is soaring 8%
  • Net profit after tax surged by 52.7%, while the company's revenue jumped by 40%
  • CEO Dr Sam Hupert lauds it as the strongest half-year revenue and profit in Pro Medicus' history

The Pro Medicus Limited (ASX: PME) share price is lifting today amid a nearly 53% boost in net profit in its half-yearly results.

The company's shares are currently trading at $50.31, an 8.59% gain.

Let's take a look at what the health imaging company reported.

Pro Medicus share price ascends amid half-yearly results

Highlights of the company's half-year (H1 FY22) results include:

  • Revenue up 40.3% to $44.33 million
  • Net profit after tax (NPAT) of $20.68 million, a 52.7% gain
  • Underlying profit before tax of $28.8 million, a 53.5% improvement
  • Cash reserves of $76.17 million, up $14.91 million
  • Fully-franked interim dividend of 10 cents per share, a 42.9% boost

What else happened in the half?

Pro Medicus experienced growth in the North American market, where revenue increased by 50%. One highlight was winning a key contract with Novant Health worth $40 million over seven years. The company also renewed a five-year contract with Allegheny Health in Pennsylvania worth $12 million.

The company's European business also achieved a 39.6% boost in revenue. Key to this was extending a German government hospital contract to a fourth site.

And finally, its Australian business saw a 7.3% gain in revenue compared to the previous corresponding period. Key to this was rolling out the Healius Ltd (ASX: HLS) contract and extending its contract with I-Med.

Pro Medicus continued its major investment in research and development in Australia and overseas.

Big ups from management

CEO Dr Sam Hupert said the result was the strongest half-year revenue and profit in Pro Medicus' history.

We thought it was a good result with all our key financial indicators heading in the right direction, not just revenue growth but also profit growth, margin expansion and retained earnings.

There were two key drivers behind the result: The first was the significant jump in transaction revenue from our US contracts which grew by 36.8%.

The second key driver was the extension of the German government contract that we announced in 2015 to a
fourth hospital which was a material sale.

What's next for Pro Medicus?

Pro Medicus is looking to further boost its presence in the United States. It is actively targeting a "growing number of opportunities in this market."

The company is confident in its future pipeline with a presence across academic, non-academic, corporate and private markets. There is a momentum shift toward cloud-based opportunities with many customers adopting a "cloud-first" strategy. Moreover, Pro Medicus sees this as a strategic advantage given its fully cloud-native offering.

What's more, the board believes there are enough cash reserves to fund the growth of the business from its internal sources. The dividend will be paid to shareholders on 25 March.

Pro Medicus share price summary

The Pro Medicus share price has climbed 10.2% in the past year. However, Pro Medicus shares are down nearly 20% year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 5% over the past year.

Pro Medicus has a market capitalisation of $5.2 billion, based on today's share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Pro Medicus Ltd. The Motley Fool Australia owns and has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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